CHAOS AS ZIMBABWE SWITCHES TO NEW CURRENCY

by Fanuel Jongwe August 21, 2006

HARARE (AFP) - Zimbabweans struggled to offload soon-to-be worthless cash as chaos and confusion prevailed ahead of a midnight deadline to convert to a new currency aimed at combating galloping inflation.

Banks extended their working hours to cater to crowds who came to dispose of their old notes while others went on shopping sprees in Harare supermarkets and shops which were still accepting the old currency.

"We would have normally closed two hours ago but we are keeping our doors open as long as we have people coming in," a teller at a bank in Harare's main shopping mall said, as crowds stood patiently in line to hand in the old bearer cheques.

"We are trying to make sure that our clients don't suffer losses as a result of the (currency) changeover so we will remain open until the queues are cleared."

Others went on shopping sprees at outlets accepting the old money.

"I am buying all these things but I don't really need them now," said Malvin Pachirera, a businessman, carting a trolley filled with groceries at a leading store.

"I would rather buy these things than lose all my money when it expires today."

In a move aimed at fighting runaway inflation, Zimbabwe's Reserve Bank (RBZ) slashed three zeroes from its currency on July 31 and set a 21-day ultimatum which expires at midnight Monday for old notes to be handed in.

Analysts meanwhile warned that many in the impoverished southern African nation, particularly those in rural areas, risked losing their savings and being stuck with notes that central bank chief Gideon Gono said would become "garden manure".

Zimbabwe's economy has been on a downward spiral over the past seven years, suffering from inflation running at around 1,000 percent and high employment with at least 80 percent of the population living below the poverty threshold.

Thousands of passengers trying to commute into Harare on Monday were left stranded as bus operators rejected the obsolescent bank notes, defying a central bank order to accept the currency until the close of business.

Many small retailers also refused the old money although those who did agree to accept payments in the old currency enjoyed brisk business.

"I have tried several shops but they are not taking the old money," said one dejected shopper, Senia Godzi.

"I will have to catch a bus to one of the townships where shops are still taking the old money."

Economist David Mupamhadzi said that many people living outside the major cities did not know about the currency reforms and were unaware that their savings were soon to turn into worthless bundles of paper.

"Our main concern is what will happen to those in the rural areas and other outlying areas who did not hear about the deadline," he said.

Political and social analyst Elizabeth Marunda called for an extension of the deadline. But central bank boss Gono has ruled out "a general amnesty or extension to the deadline given in the first place."

After announcing the switch-over, the reserve bank put a limit on amounts that could be deposited in banks in an apparent crackdown on cash hoarders often accused of fuelling a burgeoning parallel foreign currency market.

Shopowners were also barred from accepting cash payments of more than 100 million Zimbabwe dollars (400 US dollars).

Those found with cash exceeding the limit were asked to reveal its source or forfeit the money and face prosecution for money laundering.